What property is protected in Chapter 7?

Some property is protected from creditors if they sue you, but the creditors can keep trying to collect for years, or they can wait until you get property that isn’t protected. The property that is protected from creditors is calledexempt property.

In bankruptcy, you also get to keep exempt property but once you file bankruptcy, you don’t need to worry about the creditors every trying to collect again. Chapter 7, you have to give up non-exempt assets on the day you file, but then it is over. The non-exempt property can be sold. Whatever money they get is applied towards your bills, and but you won’t owe a balance even if the debts aren’t paid off.

You might get better treatmentif you file before you have to use the laws of your state, or it might be better if you wait to file your bankruptcy case after you can use them.

What debts are written off in Chapter 7?

Most debts are discharged in bankruptcy but the goal of most people whofile for bankruptcyis to dischargegeneral unsecured debts(without collateral) like credit cards, loans, and medical bills. Some taxes, student loans, support and a few other types of debt is not discharged.

What about secured debts, like home loans or car loans?

Many people are able tofile Chapter 7 bankruptcy and keep their homeor car. It depends on how much equity there is in the property. As long as the equity is protected, then the bankruptcy shouldn’t cause you to lose the asset, but you do need to make the payments.

What if you don’t have non-exempt assets, but you do have discretionary income?

If all your assets are protected, you might want to file a Chapter 7 and start over. Your income and expenses are disclosed in your bankruptcy petition in different formats.Depending on how much you make and spend, you might not qualify for 7 and you might need to consider Chapter 13 instead.

Concentrating in Consumer Bankruptcy Law since 1988;
Wake Forest Law School JD 1987
Law Office of Susanne M. Robicsek since 1993,
Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.